Focus on: Social Media
Retailers have pulled out the stops this holiday season, especially when it comes to experimenting with cutting-edge digital technologies. But innovation shouldn’t be reserved for the holidays — it is something that should be infused into the shopping experience all year long.
“Consumers are cash-strapped this holiday season, and merchants are doing everything possible to get a share of what they’re willing to spend,” said Kevin Sterneckert, VP research for the consumer value chain at Gartner Research. “To stand out, many retailers are turning to highly innovative strategies to communicate with shoppers in new ways. These are tactics that can be easily executed any time of the year.”
For example, merchants are looking beyond just standard email marketing and newspaper ads to get the news out about their products. Sears and Kmart have introduced “virtual shopping walls” in high-traffic areas such as airports and movie theaters that provide two-dimensional quick response, or “QR,” codes for its top toy items.
When an image of a QR code is captured by a quick-response scanner or mobile phone camera, the user’s device is directed to a website with related digital information about the products to help them shop on the go.
“Shoppers are so time-pressed during the holiday season, and we’re always looking for ways to make it more convenient for them,” said Brian Hanover, spokesman, Sears Holdings. “We wanted to bring the store to them this year, and based on how successful the run goes, this is something we may do more of next year beyond just the holiday season.”
According to Gartner’s Sterneckert, it is easy to develop innovative promotions with QR codes. A QR code takes only a few minutes to build, and merchants have the flexibility to change the content it’s linked up to when new promotions come up.
“It’s a very fast way to reach customers, and retailers can have fun developing engaging campaigns that encourage people to learn more about products and shop on the go any time of year,” he added.
Although some retailers such as Target have built compelling apps around the holidays and gift giving in the past, retailers should take the time to make their apps worth downloading all year-round.
“The most effective apps enrich the customer experience, but many today just draw attention to deals happening in stores and online,” Sterneckert noted. “Retailers need to give shoppers a reason to keep and use the apps they download on their phones by including helpful features, such as allowing users to make a purchase, check inventory and look up store information.”
Although shoppers are extra budget-conscious around the holidays, many are interested in getting offers that benefit and meet their needs throughout the year. A mobile app called Shopkick rewards shoppers with offers just for walking into stores. Participating retailers such as Macy’s, Target and most recently, Old Navy, have a physical device in their stores that emits an audio tone not heard by the human ear and sends a message to a shopper’s phone when they walk inside a location. The app encourages shoppers to visit items that are on sale, and customers collect points for these behaviors that can be redeemed for discounts.
“One-to-one offers like this will become increasingly more popular in the next few years,” predicted Sterneckert. “Retailers can offer customers incentives for just visiting locations and reward their behavior with loyalty points that give them the notion that they’re working toward something. Adding this type of innovation to marketing will not only make a difference during the holiday season but all year through.”
Expansion-Minded Uniqlo Aims Big
From dazzling LCD/LED video displays to rotating mannequins to staircases with color-changing LED lights, Uniqlo’s Manhattan flagship is massive in scope and bold in design.
The three-level, 89,000-sq.-ft. store is the largest Uniqlo outlet in the world. It’s a big store for a company with big ambitions: Uniqlo parent Fast Retailing Co., the world’s fourth-largest apparel retailer, is targeting $50 billion in global sales by 2020.
To meet its goal, the company has embarked on an aggressive program to expand Uniqlo from its current 1,041 locations to 4,000 worldwide. Expansion in the United States figures prominently in its strategy.
“We see great potential in this market,” said Shin Odake, CEO, Uniqlo USA. “By 2020, we hope to have opened in major cities across the country.”
The Uniqlo flagship has a high-tech vibe and ultra-modern look. It has 100 fitting rooms, 50 checkouts, 300 LCD and LED screens, and four glass elevators (complete with custom video installations).
“It’s a futuristic design that shows the future of Uniqlo,” Odake said.
The store’s clean, modern aesthetic is in sync with the goods on display. With its “Made for All” mantra, Uniqlo is known for its affordable prices and emphasis on core basics. The brand is counting on its product innovation to give it a competitive edge.
“Our approach to product is a little different from other competitors,” Odake explained. “Everyone is focusing on trend. But our focus is on how to bring innovation to core basics. Another focus is product quality.”
Among the merchandise collections highlighted in the flagship are the new Uniqlo Innovation Project (IPJ) brand of high-performance, active, everyday sportswear, which includes zippered jackets that can be torn open. The retailer’s signature moisture-trapping and heat-generating Heattech line is spotlighted in a tunnel-like department set off with mirrored ceilings and an LED reader board.
The merchandise is made with an attention to detail unusual for a brand that is not upscale. A winter parka, for example, has pockets large enough to accommodate gloved hands.
Uniqlo followed its Fifth Avenue debut with a 64,000-sq.-ft. store in Manhattan’s Herald Square area. The two high-profile locations will expose the brand to a much wider range of shoppers than Uniqlo’s only other U.S. outpost, in Manhattan’s SoHo, which opened in 2006.
Odake said the company has not yet determined the exact number of U.S. stores it will open. But he noted that Uniqlo’s U.S. operations eventually will be run by Americans.
“We think that’s important for success,” Odake said. “We have to hire people who resonate with the Uniqlo concept and train them.”
Fifty of the employees for the Fifth Avenue and Herald Square stores were flown by Uniqlo to Japan for a six-month manager training program prior to opening.
“It was a challenge for them in some respects,” Odake said, “but it was good in that it gave them the opportunity to see our operations firsthand.”
The role of store manager is a critical one at Uniqlo.
“We give them a lot of authority and expect them to be very proactive,” Odake said. “To us, the store manager is like the CEO of a company. We also give a lot of authority to store associates. We want the same type of culture here.”
Customer service is a top priority at Uniqlo. Odake explained that in Japan, customers expect good service — be it a discount chain or an upscale boutique. Uniqlo hopes to upgrade shoppers’ expectations here also.
“I’m happy we can revolutionize the retail business here by offering great service and moderate price points,” Odake said.
Half Price Books on Upward Track
At a time when many bookstores, independents and chains, are struggling, Half Price Books remains on an upward trajectory, adding stores and expanding into new markets. The company opened its first store in 1972 in a converted, 1,000-sq.-ft. laundromat in Dallas, and now operates 113 stores across 16 states. It is the largest family-owned new and used bookstore chain in the United States.
With the exception of old newspapers, Half Price stores buy and sell nearly anything printed or recorded, including books, comics, games, movies and music, from CDs to LPs. The company pays customers in cash for used items.
Kathy Doyle Thomas, executive VP, joined Half Price Books in 1989. Her responsibilities include developing national marketing efforts and managing store expansion criteria and site selection. She also heads the company’s website divisions.
Thomas is chairman of the board of directors of the Retail Advertising and Marketing Association (RAMA) and a dedicated literacy advocate. Chain Store Age spoke with the busy executive about Half Price Books and the state of retailing.
Tell us about Half Price Books’ store format.
Our stores average from 8,000 sq. ft. to 10,000 sq. ft., and are set up like a traditional bookstore.
What about the merchandise — is it all used?
No. About 40% of the stock is new, comprised mainly of overstocks and remainders. The book industry is the only industry where a retailer can send back its unsold merchandise. One of the ways we get new merchandise is by buying back these returns from publishers.
How is business?
Across the chain, we were up about 2% in comp sales in the last quarter. The summer was flat, due in part I think to Borders’ liquidation sales, which hurt a lot of booksellers. I know it impacted us, especially in those locations where we were directly across the street.
How are you finding the real estate market?
There are some great deals out there, and we are taking advantage of the opportunities. Borders going out opened up a lot of shopping centers to us. We have taken a couple of old Borders locations, which averaged about 20,000 sq. ft. We teamed up with the landlord, whereby we take half the space and the rest is rented out to another retailer.
What about existing locations?
We always look at possible relocations, and now we are finding more opportunities in this regard because of all the good deals out there. We have been able to move a bunch of stores that were in the back of a center to upfront on the pad site for cheaper [rent] than on the back site. All of this has allowed us to pick up our visibility in the marketplace.
How many new stores will open next year?
Anywhere from six to 10.
What about mobile commerce?
We have a mobile website. We worked with a small vendor here in Dallas, and it was very affordable. I think this is something that smaller retailers can do — negotiate with vendors. There are a lot of vendors out there that want to get in this space.
What is the biggest challenge for Half Price Books?
It’s the same as it is for all retailers: to make the store experience as great as it can be, from having great customer service to having the right product on hand to enabling easy returns. People want to be entertained, informed and excited when they come into a store.
But similar to consumer electronics, Half Price Books has the added pressure that comes with being in a business where people can easily look up the stock number — or in our case, book title — online. Our challenge is to make people feel inspired in our stores so that they want to come back and not just buy online.
What does the future look like for bookstores?
I think there will always be printed books because a certain segment of the population will want them. But I think the locations will be more along the lines of smaller record stores than the mass-merchandise variety we have now.
What is Half Price Books doing to address the changing marketplace?
For one, we are taking a hard look at where we open stores. In some instances, we may need only three locations in one city, and not five. We are also looking at new markets.
Tell me about the company’s green commitment.
It’s in our genes. We were founded on the concept of reuse and recycling — books in our case. Even our gift cards are now printed on recycled paper. Our environmental commitment extends from the top on down, with participation at all levels. To be successful, all your employees need to buy into it, and you have to keep challenging them. Our associates have shown true ownership in this regard.
How has Half Price Books managed to remain successful?
Part of the reason is that we don’t owe anyone money. We have no debt. We do not open or move a store, buy a new POS system or the like unless we can afford it. We do not leverage anything. We invest our profits back in the business and try to do the right thing for our employees.
Also, we offer a unique product mix that is hard to replicate.
You are very active in RAMA. What do like best about it?
The people. It’s a wonderful experience, especially if you work for a smaller company, to be around other retailers and discuss common challenges. It’s helped me grow and expand.